Cutting benefits is unfair and does not make economic sense

Cutting benefits is unfair and does not make economic sense

Ruth Lister, who is a peer, emeritus professor of social policy at Loughborough University and chair of the Compass management committee, has written a fine, short piece for the Guardian on benefits and uprating.

Her main focus is encouraging the Labour Party to be clear and bold in resisting government policies which she argues are pragmatically, politically and morally wrong. But inter alia she makes the case for decent welfare policies with commendable crispness in the light of recent cuts, restructuring and propaganda.

Professor Lister writes: "Cutting benefits is unfair and does not make economic sense. Benefits are already too low to meet people's needs. This is partly due to existing uprating policies which, until wages stagnated and with the exception of the boost that Labour gave to support for children, allowed benefits to fall further and further behind average living standards.

"The single rate of the safety net of social assistance represented 20 per cent of average earnings in the late 1960s; by 2011 it had fallen to 11 per cent. This is the context in which to judge Osborne's reference to out-of-work incomes rising twice as fast as in-work over the last five years. Moreover, over that same period, the Joseph Rowntree Foundation's work on minimum incomes standards shows that the gap between the incomes and needs of the worst-off households widened. It is mothers, as the managers of poverty, who bear the main strain in families with children.

"Cutting benefits does not make economic sense because, as the IMF has pointed out, this reduces demand: people on low incomes are more likely to spend their money, and in the local economy. Thus the multiplier effect of changing benefit levels (for good or ill) is twice that of personal tax allowances, according to the Office for Budget Responsibility.

"Much has rightly been made of the fact that approximately 60 per cent of the effects of the benefit cut will hit working households. But in using this argument we must not imply that the other 40 per cent is hitting "skivers" who don't deserve our support. The language of strivers and skivers is pernicious and misleading. Striving is not synonymous with paid work in my dictionary. Generally people on benefits are also striving: to find work; to care for their family. Moreover the demonising division of the world into strivers and skivers belies the constant movement in and out of work at the bottom of an insecure labour market.

"[T]here is nothing fair in asking for a sacrifice from the poorest members of society while using the money saved to help better-off taxpayers through the rise in personal tax allowances and cut in the top tax rate. And to the extent that the rich are being asked to make a sacrifice, it's a pin-prick they'll hardly notice. There is no equivalence with pushing people at the bottom into the hands of food banks at best and loan sharks at worst."

Professor Lister, whose many publications include The Exclusive Society: Citizenship and the Poor, is a doyenne of social policy in relation to poverty, citizenship (in particular from the perspectives of women, children and young people), gender and welfare, and social security.

Townsend was co-founder of the Child Poverty Action Group (of which Lister is also a former director) and co-author of the crucial report Poverty and social exclusion in Britain, published 12 years ago.

Between them, these two fine, engaged academics have created a remarkable amount of grounded thinking in the area of social justice and modern welfare. Current debates need much more of this.